jstratt

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20 Comments

    • Sun Apr 6th 10:04 AM | Rating: 0 0
      Commented on:
      Economic Report Summary: Worst Labor Report In Years
      80000 jobs lost really means we are not growing. It is not a huge negative worst case scenario. We may well see more job losses which are more significant but I disagree with the contention of many media outlets that this is a huge negative number.
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    • Mon Feb 25th 22:40 PM | Rating: 0 0
      Commented on:
      Existing Home Sales "Slipped" 23.4%
      I think this is all predictable. The contraction of credit means most potential buyers are unable to buy.

      We had a market driven by the price that someone with no money could buy a house. We are now in a market where the buyer has to have 10% down. Sounds like about a 15% reduction in buyers and prices to me.

      However another factor is operating at present. Banks and financial institutions are scared. As an example I went to a major regional bank and offered 2 paid off properties worth 250k as collateral for a loan to buy some RE. They said it wouldnt take a week. Then they put a freeze on and it is 6 weeks later.

      Meanwhile I have seen a house that was worth 110k at peak auction for 66k as an example. The scared bank issue will go away in a few months. The reduction in qualified buyers will not. We need a return to lending that utilizes risk management principles and I need a new bank.
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    • Mon Feb 25th 22:21 PM | Rating: 0 0
      Commented on:
      Now's Not the Time to Give Up on Stocks
      Your point is well made. At the same time we do have a credit contraction that will affect many businesses and we will likely have a recession because of it.

      With unemployment at 5% however we have a long way to go before we endure a bear market. I think it was 1982 when the Dow closed at a low of approximately 780 and we are now around 12500. Without a financial calculator that is about an increase of 15 times in 25 years. A great bull market!

      Before that we had 16 years of almost 0 gain or maybe even a loss. Today we are likely entering a period of slower growth over the next few years. I tend to think that international stocks like PG, GE, PEP, IBM, ORCL, JNJ, EMR, will grow at a slower historical rate but a faster rate than other companies.

      Needless to say I am a big fan of equities. At the same time I dont think the future growth is as high as it has been in the past.

      If you are living in the temporary world of credit crunch and all of the problems you probably cant see the forest for the trees. In the bigger picture this is nothing compared to 1980 ish when unemployment was 20% in some areas and inflation was around 15%. That created a big recession.

      What we have is a little tightening of credit which is needed. Make no mistake however it will affect growth in large corporations and small and individuals all. When it ends we will have a period of 4-5% inflation, slower growth but growth, and a stock market that has a PE of 15-16. That is lower than the 18 we have been used to and higher than the 14 we have seen.

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    • Mon Jan 21st 21:22 PM | Rating: 0 0
      Commented on:
      So Much for the Decoupling...
      I must commend the author on this timely piece.
      Apparently Tuesday in the US will be down 5% based on futures. Since I dont intend to sell I guess it doesnt much matter. I dont intend to buy additional shares tomorrow either but may in the next week. Frankly it has been a while since a good bear market with some fear involved. It was only months ago that I could see people taking huge risks with little additional return required. It made prudent financial management look out of style. Still a little calm is in order. The shoes that have dropped to date dont justify a Dow under 12000.
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    • Mon Jan 7th 22:25 PM | Rating: 0 0
      Commented on:
      Why Is This Market Holding Up?
      Your question is intriguing. However as some others have suggested we live in a world economy as never before. I would suggest a smoothing effect.

      Also the Dow and SP500 are both slightly more than 10% off of their highs. That seems like a drop to me.

      Stocks reflect expected earnings. I dont see companies warning lower and earnings season is upon us (financials excepted of course).

      Perhaps you are ahead of your time. The expected earnings growth or decline hasnt yet been reflected in individual stocks earnings. Unless earnings drop quality stocks are cheap cheap cheap.
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